Be prepared financially and psychologically for the adverse results of your investment decisions

I don't know if you are aware that no matter how much you want some of your investments to go well, most of them won't. It's part of the journey of being an investor. It's most likely the reason we are often advised to look at the total value of our overall portfolio instead of tilting our calculation to one portfolio alone.

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What this means is that instead of always looking at how many losses you are experiencing in one or two of your portfolio, you should focus on how much your entire investment portfolio is worth. This will reduce the heartache of losing money.

However, even when you try that method of dealing with losses, there's another important thing you should do. This one ought to be done even before your portfolio tanks or takes a beating. Right before, you decide to go all in on any portfolio or new buy volume in the market, you should make sure you are practicing margin of safety.

You should be prepared for a period when your investment portfolio might take a beating. This preparation ought to be financial and psychological. Financially in the sense that you make sure that your family and loved ones won't be lacking when the market is not going your way. You make provisions to be able to survive the downturn long enough to recover when the market does. This will put you in a position where too much anxiety won't deal with you. If you are anxious, it wouldn't be too much.

I am not going to completely remove anxiety because when it comes to our money, the very least signs that we are losing money will make us anxious. But being prepared with your resolved margin of safety will reduce how much anxiety eats into you when you are taking a blow in your investment portfolio.

By doing this, you will not only be working on your financial ability to survive the bad market conditions, but you will be psychologically fit to weather the storm, step back and wait for the market to dance back to your tune.

Having the humility to accept that a lot of things might not go according to plan is a trait you need to master when it comes to investing. This is why one of my favorite authors, Morgan Housel, advises that one should always plan on their plan not going according to plan. There's always every possibility that you might not like the hand the market will deal with. So, having a buffer to withstand any bad luck is how you prepare financially and psychologically for the outcome of your investment decisions.

The ever-present factor you will come to accept is uncertainty, because your portfolio might look good for one minute, and the next minute, a different guy who has lots of stock units decides to dump his portfolio and that affects the value of yours as well. So you must always make plans that allow you to live to fight another day.

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